LRA Maintains Entity Rating to CIC Holdings PLC

The rating reflects CIC Holdings PLC's (the Company) strong business profile as the Company operates both as an operating company and as a holding company. The Company has a presence in five distinct verticals namely i) Crop Solutions, ii) Livestock Solutions, iii) Industrial Solutions, iv) Health and Personal Care, and v) Agri Produce with the majority considered essential items. Pharmaceuticals, Surgical, Industrial Chemicals, and Crop Solutions businesses are operated through the Company. The Company's revenue, margins, and profitability, have increased despite a very difficult operating environment. However, the Company remains vulnerable to exchange rate fluctuations. CIC Holdings receives dividend income from its subsidiaries (mainly Akzo Nobel and Link Natural Products), which bodes well with cash flows. On the other hand, the coverages have declined over the periods even though it had improved marginally in 6MFY24 to 2.3x (FY23: 2.1x, FY22: 8.0x) due to significant increases in interest rates on higher short-term borrowing and lower operating cash flows. The Company's leverage has increased due to the short-term borrowings. These have been utilized to meet working capital requirements and to make strategic investments. Association of the Company with the sponsoring family (Captain Family) and the financial strength and acumen of sponsors, bodes well for the Company.
The rating is dependent on the management's ability to prudently manage its working capital and short-term borrowings. Meanwhile, sustaining margins and profitability, resulting in stable cash flows, is critical. A substantial increase in borrowings resulting in deterioration in coverages would be considered credit negatives.

About the Entity
CIC Holdings PLC is a limited liability company incorporated and domiciled in Sri Lanka under Companies Act No. 07 of 2007. CIC Holdings PLC is the holding company for various subsidiaries operating under five clusters predominantly Crop Solutions, Livestock Solutions, Healthcare & Personnel Care, Industrial Solutions and Agri Produce. The Company itself is listed and has its own operations in Pharmaceuticals, Surgical, Industrial Chemicals and Crop Solutions. The majority of the shares of the Company are held by Paints & General Industries Limited (53.31%) which is owned by Mr. R. S. Captains who has over 15 years of experience in the manufacturing sector. He acts as a Non-Independent, Non-Executive Director of CIC.